Argos blames weak market as sales dive 9.1%

Thursday 08 September 2011 - Editorial Assistant

Home Retail Group, owner of UK retailers Homebase & Argos, has today revealed sales declines for both of its businesses over the first half of its financial year.

Garden & DIY specialist Homebase saw like-for-like (LFL) sales slide back 3.1 per cent in the second quarter ending August 27th 2011 and despite posting positive growth for Q1 finished the half with sales down 0.6 per cent LFL compared to last year.

Variety trader Argos however ended the half with LFL sales down a huge 9.1 per cent and although the year-on-year trading decline was less severe in the Q2 margins, margins fell 100 base points in the quarter as aggressive discounting and adverse shipping and currency rates took their toll.

Terry Duddy, CEO of Home Retail Group, commented: “Overall the performance in the quarter was in line with our expectations.

“Argos’ sales continued to be impacted by the decline in the consumer electronics market, while at Homebase, after a good first quarter which saw strong seasonal sales, the second quarter was more challenging.”

Total sales reached £1.67 billion for Argos and £840 million for Homebase for the first half, representing a 7.6 per cent and 1.8 per cent decline respectively, as low nationwide consumer spending continued to have an impact on trading.

Online trading made up 34 per cent of Argos sales in Q2, an improvement from 32 per cent for the same period last year, but the oft mentioned challenges of the high street continue to dog the retailer.

With the all important Christmas period fast approaching, Argos, like many high street retailers, will be hoping for a much needed boost in sales.

Duddy added: “Whilst continuing to plan cautiously, we are in good operational shape as we approach the Christmas trading period. We continue to develop and invest in our customer proposition across the businesses.”